Strategy & Corporate Finance Practice

Leading with purpose

and humanity: A
conversation with
Hubert Joly
Best Buy’s former chairman and CEO reflects on a business’s
reason for being by defining it around purpose and humanity, the
link to competitive advantage, and managing shareholders and
stakeholders during a crisis and beyond.
by Bruce Simpson

June 2020
 In a recent poll of customers’ reaction to
the COVID-19 crisis, more than 80 percent of
respondents said they would remember which
companies “did the right thing by their workers” in
dealing with safety measures or efforts to avoid
layoffs. Three-quarters said they wouldn’t forget
those businesses that took missteps “long after”
the crisis ends.1
This is familiar terrain for Hubert Joly. After joining
Best Buy as CEO in 2012, Joly engineered a
dramatic transformation of the ailing electronics
retailer and built a reputation over time as one of
the business world’s most visible advocates of
defining a business’s reason for being with social
purpose and people as a guiding star. Today, as
more and more executives grapple with the need to
incorporate the needs of all stakeholders into their
leadership choices, Joly’s experience reflects the
challenges and opportunities inherent in mobilizing
customers, vendors, and other stakeholders in
pursuit of what he calls “noble purpose.” In this
edited interview, Joly, a McKinsey alumnus, shares
his thinking with McKinsey’s Bruce Simpson about
personal purpose and managing the evolving
landscape of corporate purpose during COVID-19
and beyond.
Personal purpose
My individual, personal purpose is to try to make
a positive difference for people around me and
then to use the platform I have to make a positive
difference in the world. This is an evergreen
purpose, meaning, whether I’m the CEO of Best
Buy or starting my next chapter, it’s always true.
It stems from a reflection on what work is, because,
of course, work is a big part of our lives. You can
see work as a curse, as a punishment because
we sinned in paradise. I tend to see work as being
essential to our humanity and to our fulfillment,
part of our quest for meaning. It’s not something
you do so that you can do something else; it’s
1
Survey: What Americans want from corporate America during the response, reopening, and reset phases of the coronavirus crisis, Harris Poll in
partnership with JUST Capital, May 7–11, 2020, justcapital.com.
2 Leading with purpose and humanity: A conversation with Hubert Joly
something that’s essential to our lives. I think
it’s essential when we lead companies that we
recognize this for all of the people working at the
company—and that we can connect their individual
purpose with the purpose of the company.
Pursuing ‘noble purpose’
These days most companies, and most leaders,
believe in the importance of purpose, and there is
a broad-based realization that excessive focus on
profits is wrong. The question is often, “So where
do you start and how do you sequence?” The
logical part of our mind would have us start with
purpose, then derive the strategy: anchor it in
purpose, and transform the organization on
that basis.
My personal experience is different. When we
started the turnaround, I was very clear about my
philosophy, which was that profit is not the purpose.
Purpose is to contribute to the common good. But
we did not spend time in the first three years of the
turnaround on refining our purpose. We spent the
time saving a ship that was sinking, by addressing
key operational-performance drivers.
We also spent a lot of time—and I can see it very
clearly with hindsight—on making sure that the
soil of the company was fertile. Do you know
the parable of the sower? If the seeds fall on
stones, nothing is going to happen. You may have
perfect seeds, but they aren’t going to grow. So
a lot of our emphasis was on creating a joyous,
growth-oriented culture, and on creating a very
human environment where people felt that they
belonged, that it was a human organization, that we
emphasized individual development.
How do you define that noble purpose? I believe
you find it at the intersection of four circles: what
the world needs, what you are good at, how you
believe you can make a positive difference in the
world, and how you can make money.
“A lot of our emphasis was on creating
a joyous, growth-oriented culture, and
on creating a very human environment
where people felt that they belonged.”
So the sequence of steps is not always going to
be, “Start with purpose.” A lot of companies are
focused on that, but it may not be the best point
of attack. When you start working on defining
purpose, the danger is to make it too abstract,
too glossy.
No. It needs to be grounded in true customer
needs, and true demonstrated abilities to achieve
competitive advantage. Your dream, of course—but
also the ability to make money: something that’s
very real, tangible, and tightly connected to the
growth and profit engine of the company.
The danger of the fact that purpose is very much
en vogue, paradoxically, is to put too much emphasis,
too early, on it—as opposed to really finding the right
time and the right approach to go after it.
If the definition of purpose is too much for the
website, people say, “Well, that’s not my reality.” So
how do we make it real and how do we unleash that
human potential?
People first
At the end of the day, a company is a human
organization made of individuals working together
in pursuit of a goal. These individuals produce
value for all stakeholders. They are the source,
not simply a resource. In a turnaround, typically
people tell you, “Cut, cut, cut.” My approach to
Leading with purpose and humanity: A conversation with Hubert Joly
turnarounds is essentially the opposite; it’s to
start with people. I spent my first week on the job
in a handful of stores, starting in the store in St.
Cloud, Minnesota, to listen to the front liners and
learn from them what was happening. That’s how
we decided to invest in the shopping experience
online and in the speed of delivery, to neutralize
the advantage of online players. We also invested
in the store experience, partnering with the world’s
foremost tech companies to develop stores within
our stores. On the cost side, we started by looking
at how we could attack nonsalary expenses. Head
count was a last resort—starting not with the front
liners but with the top of the house. In eight short
weeks in 2012, we constructed a plan that we
called “Renew Blue.” We co-created it, we didn’t go
for perfection, and then we got the bicycle going in
a turnaround, creating momentum and energy. (For
a detailed look at Best Buy’s transformation, listen
to “Transformation and resilience: An interview
with Best Buy’s executive chairman Hubert Joly,”
on Apple Podcasts.)
Shareholders as customers
When we presented our Renew Blue plan to our
investors, it had all of the stakeholders you have
to engage as you lead these turnarounds:
customers, employees, vendor partners,
community, and shareholders.
3
 With the shareholders, our approach was very
simple. We shared with them, in November
2012, our diagnosis of our strengths and our
opportunities. We were very transparent. We gave
them the overall framework and our long-term
targets. I don’t think you impress shareholders
just by the words you use. It’s more around the
say–do ratio. So in the following quarters, we
really focused on doing what we had said we were
going to do, on reporting quarterly progress, on
showing them concrete opportunities, and on
demonstrating how we had gone after them. That
allowed us to build credibility; delivering quarter-
after-quarter progress was very helpful.
Sometimes there is a debate: as a company, “Do we
need to focus on the short term or the long term?
And do shareholders force you to do crazy things
because of a short-term focus?” I think that’s a
wrong, an artificial, debate. I’m a big believer that
98 percent of the questions that are asked as
“either/or” are better answered as “and.” Of course,
you need to focus on the long term. And you need
to focus on the short term. I’ve also always found
that if you tell the investors, “Look, I’m going to
be investing in this area, and the payback is going
to look like this,” they’re very open to that. They
want you to create long-term value, so if you’re
logical and you follow through with a track record
of delivering results, they’re very open to this. Any
management team that relies on excuses related to
shareholders, is, I think, misdirected. In the end it is
about treating shareholders as customers.
Measuring purpose
These days most companies, and most leaders,
believe in the importance of purpose. And there
is a broad-based realization that an excessive
focus on profits is wrong. It’s of course the easiest
thing to measure. There are generally accepted
accounting principles [GAAP]. And at the end of
each month, you know what your profit is.
The problem is that if you focus too much on this
outcome you’re actually going to be tempted to
do the wrong thing. And, by the way, anybody
4 Leading with purpose and humanity: A conversation with Hubert Joly
who believes that your GAAP numbers, even your
non-GAAP numbers, are a good measure of the
economic value creation for a business, is wrong.
If you dig into it, accounting has never really been
designed as a way to represent economic value.
For example, you always write down goodwill, but
you never write it up. I think the key in leading
companies is to have a balanced scorecard, to have
KPIs [key performance indicators] that are focused
on customers, like a customer-satisfaction score or
revenue per customer; on employee engagement
and turnover; on vendors and how the relationship
with them is going; your impact on and reputation
in the community; and on financial performance.
So it’s a matter of managing this holistically. And
I think as proxy advisers or rating firms work on
measuring performance, I am encouraged by the
trend toward measuring an increasingly broad
range of dimensions. More can be done, though,
in particular in the area of evaluating executive
compensation. Proxy advisers focus their
evaluation on total shareholder returns over one
year, three years, five years. That seems to indicate
that profit is the only thing that matters. There is
increasing realization that having a purpose—a
long-term strategy, taking care of all of your
stakeholders, doing well by doing good—is the
right approach.
So we have a bit of a lag here. I think that over the
next several years there will need to continue to be
some work on that. There’s been some interesting
work by the SASB [Sustainability Accounting
Standards Board] and a few others. We’re not there
yet, but I think we have to continue to move forward
in that direction.
Customer purpose
When we did market research, we saw that
although many of us love technology, and there are
a lot of exciting new products and things that we
can do with technology, it’s complicated, and can
be confusing. We need help as customers.
“One of the diseases that exists in
the world is the notion of zero-sum
games. You lose, I win. I win, you lose.
That’s wrong.”
So the purpose of Best Buy, in relation to
customers, is not just to sell you a TV or a
computer—though we’ll gladly help you buy one.
But it goes beyond that. It’s about what we call
enriching lives through technology by addressing
key human needs. The reason people buy a
computer or a phone is not really for the product;
it’s for what it can do.
Focusing on underlying human needs unleashed
a lot of growth opportunities—such as our
strategy to help aging seniors live in their
homes independently, for longer, by putting
sensors in their home, under the bed, in the
bathroom, in the kitchen, or even on themselves
for full detection. Through remote monitoring
and artificial intelligence, we can help detect
whether something is going wrong and trigger an
intervention. That’s a real need, and note how the
strategy is not focused on the fact that we have
brick and mortar stores or that we are a retailer. It’s
based on addressing human needs.
Interestingly enough, we have a second purpose,
which is to help the world’s foremost tech
companies to commercialize the fruit of their
billions of dollars of R&D investment. It’s not about
“showrooming,” it’s about showcasing—helping
customers understand what can be done. And it’s
been a critical element of our journey, our purpose,
and our economic equation.
Leading with purpose and humanity: A conversation with Hubert Joly
Vendors as partners
The way we dealt with our vendor partners,
Amazon or Apple and so forth, illustrates our
basic philosophy of leading with purpose and
humanity, by taking care of and working with all
of our stakeholders. You could see these vendors
as competitors, right? Amazon, in some ways, is
a competitor. Apple is an important vendor, but
it also has its own stores. What we decided was
to cooperate with them. One of the diseases that
exists in the world is the notion of zero-sum games.
You lose, I win. I win, you lose. That’s wrong.
With Amazon, we decided that they were a
developer and manufacturer of great technology
products that customers wanted. So of course we
were going to sell these products in our stores.
Amazon now has corners in our stores next to
Google—which is great for customers. They can
see the various opportunities available, and they
can understand what can be done with that.
We’ve even gone beyond that. One day—it was
April 2018—Amazon and Best Buy announced a
partnership where Amazon gave us the exclusive
rights to their Fire TV platform to embed that
platform into smart TVs. These smart TVs powered
by Fire TV are only available at Best Buy or by Best
Buy on Amazon.com. So it creates opportunities.
Similarly, Apple has its own stores, but the Apple
store within Best Buy is a way to expand access to
5
 Apple’s products for more of its customers. So it’s a
case where the customers win, the vendor partner
wins, and we win as well.
Purposeful leadership
One thing I want to add is what this focus on
purpose and humanity means from a leader-
ship standpoint.
The first thing is to be aware of what drives you as
a leader. Be clear about your purpose as a leader,
the purpose of the people around you, and how all
of this connects with the purpose of the company.
If you are driven by power, fame, glory, or money,
this is a danger zone. Your role as a leader also
is not to be the smartest person in the room and
to make sure that everybody around you knows
how smart you are. It’s to create an environment in
which others can be successful.
We need leaders who lead with all of their body
parts: their brain, their heart, their soul, and their
gut. Especially in a crisis like we have today with
COVID-19, using your instincts and your intuition is
also important. So use all of your body parts.
Perfection is very dangerous because you work
on a team, and on your team you have other
human beings. And guess what? They’re not
perfect. They’re making mistakes. Being able to
say, “My name is Hubert, and I need help,” is a good
exercise that creates a much better outcome.
Bruce Simpson is a senior partner in McKinsey’s Toronto office.
He wishes to thank Becca Coggins and Jinchen Zou for their contributions to this interview.
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Copyright © 2020 McKinsey & Company. All rights reserved.
6 Leading with purpose and humanity: A conversation with Hubert Joly
On COVID-19
In this COVID-19 crisis in particular, I’ve seen a lot
of leaders being OK with saying, “All right, this is
what we know at this point, this is what we don’t
know, this is the work we’re doing to figure out the
answer”—but not feeling the need to have answers
to all of the questions and giving the impression
that no mistake is being made. In fact, I think any
leader knows that creating an environment in
which it’s OK to make mistakes is something that
makes complete sense. So beware the concept of
perfection. Embrace vulnerability.
For me, one lesson from this crisis is around how
we define performance. This is a time when our
performance as leaders is not defined by our share
price or earnings guidance. It will be measured
by how we treat employees, how we deal with
our customers and communities. Back in 1940,
Winston Churchill spoke about Britain’s finest hour.
This crisis can be our finest hour as leaders, but it
requires that we ask ourselves a few questions.
One is, are we taking the time, first, to take care
of ourselves? That means sometimes hitting the
pause button and being clear about how we want
to lead. The second question is, what actions are
we taking and what is driving them? I am inspired
by many great examples of companies taking care
of their employees, not laying them off but perhaps
putting them on furlough. In Europe, they have
put in measures that enable employees to stay on
payroll, with government subsidies. Employees
will help us move forward. I think this crisis will
accelerate the movement toward the necessary
refoundation of business and capitalism, around
purpose and humanity, and I want to be part of it.